Abe Plans More Stimulus as Japan Slashes GDP Forecast; Expect More Abe Failures

In the short run, fiscal stimulus adds to GDP.  In the long run it subtracts.

Damn the long-term consequences, Abe Orders New Stimulus Package After Election Win.

Japanese Prime Minister Shinzo Abe ordered a new round of fiscal stimulus spending after a crushing election victory over the weekend as evidence mounted the corporate sector is floundering due to weak demand.

Abe did not give details on the size of the package, but Japanese stocks jumped nearly 4 percent and the yen weakened over perceptions a landslide victory in upper house elections now gives him a free hand to draft economic policy.

An unexpected decline in machinery orders shows the economy needs something to overcome consistently weak corporate investment. Economists worry, however, that Abe’s focus on public works spending will not tackle the structural issues around a declining population and workforce.

The government was ready to spend more than 10 trillion yen ($100 billion), ruling party sources told Reuters before the election.

“We are going to make bold investment into seeds of future growth,” Abe told a news conference on Monday at the headquarters for his ruling Liberal Democratic Party (LDP).

Yen “Plunges” on Stimulus Announcement

Bloomberg reports Yen Plunges the Most Since 2014 on Abe’s Fiscal Stimulus Plans

Japan’s currency weakened against all of its 31 major peers after Abe, speaking in Tokyo on Monday, repeated his pledge for action on a stimulus package. He will order measures to support domestic demand, including plans to speed up the construction of high-speed trains.

Alleged Plunge Barely Visible

YEN Monthly 2016-07-11

On a monthly chart the alleged plunge is barely visible, but the Nikkei rallied about 2.5% on the news.

More Good News

The Wall Street Journal reports Japan Set to Slash its 2016 Economic Growth Forecast.

The Japanese government is set to almost halve its economic growth forecast for this year after taking into account its changed sales tax policy and a global economic outlook darkened by the Brexit vote, according to people familiar with the matter.

Prime Minister Shinzo Abe’s administration plans to slash its 1.7% price-adjusted growth forecast for the year ending March 2017 to 0.9% in a new projection due for release Wednesday, the people said. The previous figure was released in January.

The revision is partly due to a decision announced in June by Abe to postpone a sales tax increase to 2019 from the previously scheduled April 2017, the people said. Officials had previously assumed that consumers would buy goods and services aggressively before items became more expensive with the higher tax rate.

Another reason for the large cut in the growth forecast is global market uncertainty stoked by the U.K.’s recent decision to leave the European Union and the impact it could have on Japan’s already lackluster exports and corporate spending, they said.

Abenomics Idiocy

Abe actually thought a sales tax increase would spur spending. Even if consumers did as expected, sales would have crashed after the hike.

Once again, Japan is back to the “tried and true” stimulus hat. I happen to have a picture of decades of stimulus.

Abenomics 2016-07A

Achieving Inflation is Child’s Play

Abe has also guaranteed 2% inflation but has failed in every attempt to deliver it. This guy cannot succeed at anything.

Once again, I present Mish’s Sure Fire Proposal to End Japanese Deflation: Negative Sales Taxes, 1% Monthly Tax on Gov’t Bonds.

Mish’s Four Pronged Proposal to End Japanese Deflation

  1. Negative Sales Taxes
  2. One Percent Tax, Per Month, on Government Bonds
  3. National Tax Free Lottery
  4. Hav-a-Kid

For additional details, please click on the above link.

My Price

My price for this amazing plan is $0. It’s free for the taking.

It’s truly pathetic when you cannot destroy your own currency despite years of trying.

Negative Results of Stimulus Explained

For those who really want to know why stimulus cannot and will not produce the desired results, please consider Lacy Hunt on Negative Multiplier of Government Debt.

Mike “Mish” Shedlock

Stellar Opportunity for UK to Set Example for the World

IMF head Christine Lagarde has flip-flopped twice on the impact of Brexit.

  1. Ahead of the vote on Brexit, IMF head Christine Lagarde warned of a prolonged period of uncertainty.
  2. On July 3 Lagarde, said Brexit provides the EU a “Better Opportunity for Reform
  3. On July 7, Largarde was worried Brexit would lead to “Disastrous” Trump-Style Protectionism

View number 2 is ridiculous. Yet one can change two characters in the sentence and get things correct.

Stellar Opportunity for UK

The idea that a group of 27 nannycrats are going to agree on needed reforms and implement them is ridiculous.

However, change sentence number 2 to “Brexit provides the UK a Better Opportunity for Reform”, and you have the right idea.

Let the EU Self Destruct

France and Germany want financial transaction taxes. Let em. It will mean more business for the UK, not less.

France insists on agricultural tariffs. Should the UK care now?

The EU does not like Ireland’s low corporate tax rate so much so that the EU is Considering a Minimum Corporate Tax.

Should the EU insist on such silliness, it will drive business to the UK, not away from London.

Trade War the Right Way

The UK should preemptively stick it to the EU by slashing its corporate tax rate to 10%, lower than any country in the EU.

The above table created from Trading Economics data.

Black Holes

France, Germany, and Belgium are hell bent on sticking it to the UK to make a point.

Recall that the Belgian Premier Warns EU Won’t Help UK Out of “Black Hole”

Ironically, If the UK does things correctly, it will be the EU that falls into the black hole.

Set Example for the World

Shed of inane EU rules and regulations coupled with the freedom to do anything it wants, the UK has a golden opportunity to embrace the benefits of genuine free trade and growth via low taxes.

I have often stated the first country that fully embraces free trade, regardless of what any other country does, will come out stunningly ahead.

The UK now has that chance.

Mike “Mish” Shedlock.

Precise Way to Start Negotiations with EU Mules: Get France to Piss and Moan

I was in vacation all last week in the Crested Butte area of Colorado, a very beautiful area. On the flight back home last evening I was thinking about how the UK could make the most of Brexit.

One of the ways I came up with was for the UK to cut corporate taxes and truly embrace free trade. I wrote about that at 2:00 AM this morning in Stellar Opportunity for UK to Set Example for the World.

I was unaware that UK chancellor George Osborne had decided to do cut taxes.

It’s Noon and I just got up, surprised to see this headline: France Hits Out at UK Plan to Cut Corporate Tax.

France’s finance minister has warned that the UK’s plan to slash corporate taxes could hit Britain’s negotiations with the EU following the country’s vote to leave the bloc.

Michel Sapin said the initiative — which officials in both Paris and Berlin view as hostile — could affect Britain’s prospects of retaining the “European passport” that allows financial groups to sell their services and raise funds in the EU’s single market.

“I am not persuaded that this is a good thing for the UK,” the French minister said of Britain’s corporate tax plans at a press conference on Monday. “This will not change anything on the passport for instance. In fact, it’s not a good way to start a negotiation.”

Mr Sapin also criticised the “manners” of George Osborne, the UK chancellor who has promised to cut the corporate tax rate by five points to 15 per cent in an attempt to boost Britain’s attractiveness to business in the wake of last month’s referendum.

His comments echo remarks by Wolfgang Schäuble, Germany’s finance minister, who last week criticised the UK’s fiscal “race to the bottom”.

France and Germany are both concerned that the UK will be tempted to establish itself as a low-tax offshore jurisdiction in the EU’s outskirts in response to the Leave vote.

Michel Sapin Pisses and Moans

Sapin

First Step in Training a Mule

There’s an old saying “The first step in training a mule is to hit it as hard as you can in the head with a stick.”

I don’t really advise that with mules, but it is the precise thing to do to EU nannycrats.

Reflections on Clearness

It’s clear that the UK can’t participate in the big decisions involving the EU’s future,” said Emmanuel Macron, France’s economy minister.

Well, it’s equally clear the EU cannot participate in big decisions involving the UK’s future.

And with his plan to cut corporate taxes, chancellor Osborne just hit nannycrat mules in Germany, France, and Belgium in the head with not a stick, but a brick.

Trade War the Right Way

The UK should preemptively stick it to the EU by slashing its corporate tax rate to 10%, lower than any country in the EU.

The above table created from Trading Economics data.

Black Holes

France, Germany, and Belgium are hell bent on sticking it to the UK to make a point.

Recall that the Belgian Premier Warns EU Won’t Help UK Out of “Black Hole”

Ironically, If the UK does things correctly, it will be the EU that falls into the black hole.

Set Example for the World

Shed of inane EU rules and regulations coupled with the freedom to do anything it wants, the UK has a golden opportunity to embrace the benefits of genuine free trade and growth via low taxes.

I have often stated the first country that fully embraces free trade, regardless of what any other country does, will come out stunningly ahead.

The UK now has that chance.

Osborne Changes Tune

Osborne, whom I heavily criticized before Brexit because of his idiotic proposal to hike taxes (See Brexit Debate Focus Shifts to Chickens, Dead Cats, Taxes), has actually started the negotiation process quite well.

Getting France and Germany to piss and moan about “unfair” corporate tax rates in the UK is an excellent first step by Osborne.

Merkel Needs Another Smack to the Head

EU mules and nannycrats are very stubborn beasts.

Osborne should cut the rate not to 15% but to 10% to make the point clear that negotiations will not be as one-sided as her majesty, German chancellor Angela Merkel thinks.

As I have stated all along, the UK, not the EU has the upper hand in these negotiations.

For details, please see “No Cherry Picking” Says Merkel; Risk of Global Trade Collapse says Mish.

Mike “Mish” Shedlock

Theresa May becomes UK PM on Wednesday: “No Second Referendum, No Back Door Reentry”

Earlier today, Prime Minister David Cameron announced his resignation effective Wednesday.

On Wednesday evening, Theresa May will become the UK’s next prime evening without a single vote being cast.

Under UK parliamentary rules there is normally a vote by party members on the top two candidates.

However, UK Energy Minister Andrea Leadsom pulled out of the race following her controversial comments that motherhood made her a better candidate than May.

No Second Referendum, No Back Door Reentry

Theresa May

Cameron Resigns Wednesday

CNN reports David Cameron to Resign Wednesday as Theresa May to become British PM.

British Prime Minister David Cameron is to resign Wednesday, paving the way for Home Secretary Theresa May to take the reins.

May was officially named Conservative Party leader and successor to Cameron “with immediate effect” Monday, said Graham Brady, chair of the 1922 Committee, a collection of Conservative members of Parliament key to electing the party leader. She will replace Cameron on Wednesday evening.

In remarks shortly after her leadership was affirmed, May said her priorities will be to administer Britain’s exit from the European Union, a move approved by voters last month, to unite the country and to create a “strong, new, positive vision for the future,” not just for the privileged few, but for everyone.

On Monday, May’s only remaining rival to replace Cameron — Energy Minister Andrea Leadsom — pulled out of the race following controversy over comments she made about motherhood and leadership.

“Obviously, with these changes, we now don’t need to have a prolonged period of transition. And so tomorrow I will chair my last Cabinet meeting. On Wednesday I will attend the House of Commons for Prime Minister’s questions,” Cameron told reporters Monday outside 10 Downing Street.

“And then after that I expect to go to the palace and offer my resignation. So we will have a new prime minister in that building behind me by Wednesday evening.”

Remainers Disappointed

May’s comments about no more referendums and no back door reentry will play quite well with those in favor of Brexit.

No More Referendum Debate

Calls for another referendum will fall on deaf ears even though a Petition calling for second EU referendum topped three million signatures as of June 26.

In an amusing twist of irony, that petition was started by William Oliver Healey, an English Democrats activist and Leave campaigner, who was concerned the Remain camp would win.

Government petitions which reach over 100,000 signatures must be considered for debate in parliament.

By June 29, Petition Signatures Topped 4 Million. Remain protesters came up with a catchy ditty to the tune of “Hey Jude” Replacing those words with “EU”

Hey Jude, Unbrex My Heart

Unbrex My Heart

Excellent Start to Brexit Negotiations

Theresa May will have nothing to do with another referendum.

Moreover, chancellor George Osborne, most likely ex-chancellor, took a necessary step of smacking EU mules in the head with a corporate tax cut.

Merkel insists negotiations will not start until the UK formally files article 50 to withdraw from the EU. However, it’s clear the negotiations have indeed started, and those negotiations are off to an excellent start.

For details please see Precise Way to Start Negotiations with EU Mules: Get France to Piss and Moan.

Mike “Mish” Shedlock

Warmongers Delight: Abe Hits Super-Majority with Sweeping Victory in Japan Election



The warmongers and gun manufacturers are cheering today as Shinzo Abe Wins Sweeping Victory in Japan Elections.

Shinzo Abe has won a sweeping victory in elections to Japan’s upper house, leaving him within reach of a parliamentary supermajority that would allow the government to revise Japan’s pacifist constitution.

With seven proportional representation seats left to declare on Sunday night, Mr Abe’s ruling Liberal Democratic party and its allies had won 72 out of the 78 seats they need for a two-thirds majority.

Toru Takigishi, a 76-year-old chemistry professor in Tokyo and a long-time LDP supporter, said he voted for the Communist party for the first time. “I’m happy with the current constitution and I want peace to be maintained. At least there is a checking mechanism for constitutional change under the Communist party,” Mr Takigishi said.

Japan Election Boosts Shinzo Abe’s Bid to Revise Constitution

The Wall Street Journal reports Japan Election Boosts Shinzo Abe’s Bid to Revise Constitution

With most results in, Mr. Abe’s Liberal Democratic Party and its junior partner, Komeito, were on track to win nearly 70 of 121 seats that were up for grabs in the 242-seat upper house. A handful of seats remained undecided early Monday.

The coalition parties plus smaller opposition parties and unaffiliated lawmakers who favor constitutional revision were likely to control two-thirds of Parliament’s upper house after the election, projections by Japanese media showed. Revision requires two-thirds of both houses of Parliament, after which the changes must be approved by a majority of voters in a national referendum. The coalition already controls two-thirds of the lower house, which wasn’t up for election, meaning Mr. Abe has the votes to start the revision process.

Any move to change the constitution is likely to spark a divisive battle. Last year, Mr. Abe’s government enacted a bill allowing Japanese troops to fight overseas along with the country’s allies, following a controversial reinterpretation of one article of the constitution.

The move prompted months of protests, some attracting tens of thousands of people. Though the security bill was passed by both houses of Parliament, experts testified that it was unconstitutional.

With the election over, Mr. Abe will likely focus on passing the stimulus package, a task that has gained urgency since the U.K.’s decision last month to leave the European Union cast further uncertainty over the global economy.

Mr. Abe hasn’t disclosed any details, but the stimulus program is expected to be a multiyear effort to upgrade the nation’s transport infrastructure, expand child care and nursing-care services and create scholarships for students.

Meanwhile, the Bank of Japan is widely expected to expand its efforts to stoke growth and inflation when its policy board meets July 28-29. Its most likely options are increasing the size of its unprecedented asset-purchase program and pushing a key interest rate on bank reserves further into negative territory.

For further discussion of warmongering possibilities, please see Japan’s Abe Angling for War with China? Could the US be Drawn In?

Mike “Mish” Shedlock



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25 thoughts on “Warmongers Delight: Abe Hits Super-Majority with Sweeping Victory in Japan Election”

  1. Well… so much for Japanese pols. Maybe George Soros was counting the votes like he did for Clinton.

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    • If Japan has a military, does that make war more, or less likely? What if the US were to stop defending Japan? Myself I’d rather see the US pull back it’s presence around the globe, but for that to happen, countries like Japan would need to step up their own military. I’d like to see the same thing happen in Europe.

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      • The problem with Japan having a strong military to the point where they get adventurous and stumble into a conflict with China is this:

        Treaty of Mutual Cooperation and Security between the United States and Japan

        https://en.wikipedia.org/wiki/Treaty_of_Mutual_Cooperation_and_Security_between_the_United_States_and_Japan

        Liked by 1 person

      • Winston — there are also laws about US officials sending classified documents around to insecure servers. There are laws about perjuring yourself before Congress, there are laws about a lot of things.

        If, hypothetically, Japan sends 250,000 soldiers and 5000 armored vehicles and 20,000 missiles into North Korea and/or China — then James Comey will just hold a press conference and say it wasn’t intentional.

        Oh, and read my lips, no new taxes, I did not have sex with that woman, WMD are a slam dunk, mission accomplished, if your like your doctor you can keep your doctor….

        Who is naive enough to still believe any of this?

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      • notamemberofanyorganizedpolicital said:

        Touche Frank touche.

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  2. ANOTHER STOLEN ELECTION?

    I FIND IT DIFFICULT TO ACCEPT THAT A “SUPER MAJORITY” OF JAPANESE WANT TO GO TO WAR AGAINST CHINA. I ALSO FIND IT DIFFICULT TO ACCEPT THAT THE JAPANESE ARE SATISFIED WITH THEIR ECONOMY AND WANT TO GIVE “ALL” OF THEIR PENSION SAVINGS TO KEEP THE FEDERAL RESERVE AFLOAT.

    ALL I CAN SAY, IS ALL THESE STOLEN ELECTIONS RAISE THE QUESTION ABOUT THE VIABILITY OF A DEMOCRATIC GOVT WHEN THE VOTERS REFUSE TO ASSERT THEIR RIGHTS.

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  3. Not a bad idea. Let the Japanese launch a ground war against the North Koreans before Kim Jong-Un builds an ICBM that could take out Los Angeles. We’ve supported the Japanese economy long enough with our lopsided trade agreements. Now they can pay us back by doing some of the dirty work.

    Besides, Abe will destroy the Japanese economy long before he could build a formidable military, especially if he continues to enlist Paul Krugman’s help.

    Why shouldn’t Japan be allowed to have their own military? Because they lost WW2? We let the Germans build another military. Some people might call that racial discrimination. Let the Japanese defend their own country. Quite frankly, I’m sick and tired of American boys spilling their blood in foreign lands.

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    • See my post above.

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      • Winston, treaties are made to be broken. Have many times have we violated the Geneva Convention in the last 10 years?

        There’s no honor amongst thieves, sir.

        Loyalty goes to the highest bidder.

        The gentleman’s handshake died about a half-century ago if you haven’t noticed.

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    • I’m sick and tired of the US government spilling the blood of Americans and foreigners in foreign lands. Let alone wasting trillions of dollars of wealth.

      As for Japan, let them continue destroying themselves. Apparently having a high average IQ doesn’t preclude general stupidity.

      Liked by 1 person

      • But if they can’t kill all the males in the USA then they can’t have all the women to themselves. That’s why Mish keeps posting all this Mush.

        Japan isn’t invading anyone anytime soon.

        China might start something…North Korea maybe…but it’s the USA that can’t wait for Round Three in an East Asian War that’s doing the “mongering” not Japan.

        Just start adding the number of ships the US Navy, US Coast Guard, US Marine Corps and Navy Seals now have. Once you start including RHIB’s you’re up to 600 plus vessels for the USA alone.

        I don’t see the Marines, Coast Guard, Navy or the President doing much hiring either.

        Shall we throw in Ukraine? ISIS? Yemen? Libya? Sudan? Somalia? Ethiopia and Honduras? Why not.

        The whole thing is just a computer game with humans thinking they’re in charge anyways.

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      • Yeah, Iko….but the great equalizer is the nuclear warhead. And all it takes is one smallfry nuke-equipped nation with a psycho head of state to put an end to it all and knock the planet off it’s axis. One nuke neutralizes 600 tanks and thousands of aircraft just like paper covers rock. This is not 1950 anymore. We’re in a game with much higher stakes in 2016. And there are many nutcases today running countries that are nuclear armed. God help the human race. I’m damn glad I’m as old as I am. If I could rid the planet of all nuclear weapons I’d make it happen tonight. We’re passing off a very dangerous world to the young folks. They have every right to be resentful for the lously job we’ve done.

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  4. Bring on the 80 year cycle!

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  5. Will the young Japanese men be allowed to bring their anime body pillows to war?

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  6. If we continue on our current path, we may willfully stumble into a major war with China and/or Russia and wind up LOSING badly.

    And that would be the best possible outcome.

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    • We had a war with China and the USSR. It happened in Vietnam. We lost badly. Same in Korea. No victory. Iraq – no victory. Afghanistan -no victory. Get the picture? The country won’t support winning a war.

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      • Like

      • America no longer enters wars to win wars. We enter wars to turn over weapon inventory to benefit the defense industry. We turn wars that should be won in a 2 years into a perpetual conflict that drags on for decades to pump the economy short term – but that will bankrupt the nation long term.

        This should be an obvious conclusion by any rational observer.

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  7. Queue the video with Michael Dukakis “driving” a tank … just super-impose Abe’s head under the helmet.

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  8. Diogenes of Sinope said:

    Toru Takigishi, a 76-year-old chemistry professor in Tokyo and a long-time LDP supporter, said he voted for the Communist party for the first time. “I’m happy with the current constitution and I want peace to be maintained. At least there is a checking mechanism for constitutional change under the Communist party,” Mr Takigishi said.

    The older guy remembers what war brings. The mid-career Japanese professional class has experienced 25 plus years of deflation and likely couldn’t properly manage an economy that was actually growing. Much like war itself, they’ve simply never experienced it.

    The level headed chemistry professor? He prefers the communists, for the peace they bring to the table.

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  9. Seriously….I can lever a long Yen short dollar trade 100 to one. So what do I buy with all that Yen? Not treasuries. Not gold. Not oil. Not platinum.

    I buy silver, silver and more silver…and then try and keep up with Made in China.

    I’m sure Psycho-fant USA will be happy to throw in a dozen F-22’s just to keep up the appearance of a recovery.

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  10. Japan, South Korea, and the Philippines need to nuke up and fast. Communist China is a hammer. It is their nature to control like in restrict movement and charge fees for just sailing in the ocean a thousand miles from their shore.

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  11. Although Mish’s tone of anti military rings from his blog, O am all for Japan arming their own military and they have a right to defend their homeland. Why should we shoulder this burden? Otherwise pay the USA to maintain the area but I am all for bringing our troops home and letting the Navy have access to their ports.

    Like

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